Published in The Financial Express on Sunday, 7 June 2015.
The government opts for signing bilateral free-trade area (FTA) and preferential trade area (PTA) agreements as tools to diversify export products and markets since the country is poised to graduate into middle-income status, officials said.
Until now, they added, Bangladesh is a signatory of several FTAs and PTAs on multilateral platform but is yet to form any bilateral FTA and PTA.
Under the move the ministry of foreign affairs (MoFA) will convene next week a meeting styled ‘Bangladesh and FTA-way forward’ to elicit ideas and reflections threadbare on possible options for Bangladesh and all possible dimensions.
Top government officials, leaders from business and industry, researchers and academics will attend the meeting to place their views and opinions as to whether Bangladesh should open up its market further through forming FTAs and PTAs in line with the principles of globalisation or find other options for market-and product diversification.
Officials said Bangladesh at present stood at the stage of starting negotiations for the formation of bilateral FTAs or PTAs with at least two countries— Malaysia and Turkey.
The opening steps are aimed at reducing the country’s trade gap with them through raising export. Besides, Myanmar and Sri Lanka have also expressed interest in striking preferential trade deals with Bangladesh.
According to a paper prepared for the meeting at the MoFA, being a least developed country (LDC), Bangladesh enjoys duty-free and quota-free market access in trade and goods in major export destinations, including member-countries of OECD (The Organisation for Economic Co-operation and Development).
Besides, it also enjoys the same facilities in some developing countries under GSP (generalised system of preferences) and LDC initiative of the World Trade Organisation.
These market-access facilities are autonomous and do not require reciprocal treatment from Bangladesh. This advantage is facilitating Dhaka’s export to those destinations.
The MoFA considers that these facilities have not yielded desired results in terms of diversification of export marker and products, foreign direct investment, trade in services.
“As Bangladesh economy continues to expand, it is increasingly viewed that Bangladesh would need to secure her long-term economic and commercial interests by pro-actively initiating arrangements as FTAs,” it said.
“As has been seen elsewhere, the FTAs are expected to enhance economic cooperation through trade diversion and trade creation among the signatory countries and also enhance competitiveness of products of trading partners,” the MoFA noted.
A senior official at the ministry of commerce (MoC) said Bangladesh adopted an FTA policy in 2010 but was yet to move forward for signing bilateral FTA.
“The country’s export sector will experience tough competition then and that’s why we need to take preparation on how to face the challenges. Arrangement like bilateral FTA and PTA may help then,” he added.
The official thinks at least five years or more may be needed to make FTA and PTA effective after their signing. “So, it’s an appropriate time to take decision on signing FTAs and PTAs before graduation to middle-income nation.”
When contacted, executive director of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman told the FE Wednesday Bangladesh is yet to sign any bilateral FTA or PTA but it signed such trade instruments on regional planes.
Welcoming the initiative taken by the MoFA, he said the country should have forward- looking strategy for fostering the economy.
“We have to devise strategies for FTAs and PTAs like principles, negative list of products, and selection of countries to which we should sign such agreements or not,” Mr Rahman said.
“Both the proactive and reactive business strategies need to be considered here for signing FTAs and PTAs,” he added.